Kmart Australia Limited T/A Kmart Australia

[2021] FWC 2770

[2021] FWC 2770

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Kmart Australia Limited T/A Kmart Australia
(AG2021/5004)

Retail industry
COMMISSIONER BISSETT	MELBOURNE, 1 JUNE 2021

Application for an order relating to instruments covering new employer and transferring employees.

[1] On 5 May 2021 Kmart Australia Limited T/A Kmart Australia (Kmart) made an application for an order relating to instruments covering a new employer and transferring employees pursuant to s.318 of the Fair Work Act 2009 (FW Act). The application seeks an order from the Fair Work Commission (the Commission) relating to current employees of Target Australia Pty Ltd (Target) at 17 Target stores who are prospective employees of Kmart (the Transferring Employees).

[2] Kmart is seeking an order that the Target Australia Retail Agreement 2012 (Target Agreement/transferable instrument) does not cover Kmart and the Transferring Employees listed in the Application, and that the Kmart Australia Limited Agreement 2018 (Kmart Agreement) will cover Kmart and each of the Transferring Employees.

[3] The application contained detailed grounds and submissions and was accompanied witness statements in support of Mr Craig Perry, Head of remuneration and Benefits, Kmart Group and Mr Christopher Renshaw, General manager – Stores, Kmart. These witness statement addressed matters relevant to the application before the Commission. Their contents are not in dispute and are accepted by me for the purpose of determining the application.

[4] The grounds in support of the application state:

•  On Friday 22 May 2020, Wesfarmers Limited (Wesfarmers) announced on the Australian Stock Exchange its intention to rebadge a number of Target and Target Country stores, as Kmart or Kmart Hub stores, as follows:

◦  Between 10 to 40 large format stores to Kmart, subject to landlord support; and

◦  Approximately 52 Target Country stores to Kmart Hub stores.

•  Since the announcement, Wesfarmers confirmed the conversion of 71 Target and Target Country stores to Kmart and Kmart Hub stores in 2020 and 2021.

•  On 6 October 2020, Kmart made an application under 318 of the FW Act for an order that the Target EA does not, and will not cover all Target employees covered by the Target EA and employed in the 71 stores mentioned above, who have accepted offers with Kmart, and all permanent employees (casual, part-time and full-time) hired by Target into any of the 71 stores after the date of Kmart’s application with the Fair Work Commission and who accept offers of employment with Kmart. On 30 October 2020, Deputy President Hamilton issued the order (AE898762 PR724115) under section 318(1) of the FW Act in relation to the transfer of employees from Target to Kmart in these 71 stores.

•  As at the date of this Application, Wesfarmers has confirmed the conversion of an additional 17 Target and Target Country stores to Kmart and Kmart Hub stores in 2020 and 2021 (the Conversion Stores). While it is expected that Wesfarmers will later add further stores to this list, those stores do not form part of this Application, which specifically relates to the 17 Conversion Stores.

•  In connection with the conversion of these stores from Target or Target Country to Kmart or Kmart Hub, Kmart has offered employment to all employees in the Conversion Stores to carry out the same (or substantially the same) work that the employees presently carry out for Target. In addition, Kmart intends to offer employment to all permanent (casual, part-time and full-time) Target employees who are recruited by Target in the Conversion Stores after the date of this application.

•  If the employees who are subject to the Target EA accept such offers and commence employment with Kmart in accordance with the employment offer, they will become transferring employees for the purpose of section 313 of the Act (Transferring Employees). As at the date of this Application, approximately 96% of the relevant employees have accepted employment with Kmart. The employees are due to commence employment with Kmart in 2021.

•  Kmart is seeking an order pursuant to s 318 (1)(a) of the Act, that:

◦  the Target EA will not cover Kmart and the Transferring Employees in respect of their work with Kmart; and

◦  the Kmart EA will cover Kmart and the Transferring Employees (the Order).

•  The Kmart EA is a national enterprise agreement that applies to approximately 31,730 Kmart employees who work in 209 Kmart stores throughout Australia. The Kmart EA was approved by the Fair Work Commission on 20 November 2019, began operating from 27 November 2019 and has a nominal expiry date of 28 February 2023.

•  As a new employer or person likely to be a new employer, Kmart has standing to bring an application pursuant to section 318(2)(a) of the Act.

[5] Upon receipt of the application my Chambers contacted the relevant unions (the Shop, Distributive and Allied Employees Association (SDA), The Australian Workers’ Union (AWU), and United Union of Workers (UWU)) seeking any views of the orders sought. The SDA advised that it did not oppose the application. No response was received from the UWU or AWU.

[6] In the absence of any objection to the application, and having been advised by the Applicant’s representative that it was content for the application to be determined on the papers, I have proceeded to determine the matter by reference to and reliance upon the grounds, submissions and other materials provided with the application.

[7] Section 318 of the Act sets out the circumstances in which an order such as that sought by Kmart may be made by the Commission:

318 Orders relating to instruments covering new employer and transferring employees

Orders that the FWC may make

(1) The FWC may make the following orders:

(a) an order that a transferable instrument that would, or would be likely to, cover the new employer and a transferring employee because of paragraph 313(1)(a) does not, or will not, cover the new employer and the transferring employee;

(b) an order that an enterprise agreement or a named employer award that covers the new employer covers, or will cover, the transferring employee.

Who may apply for an order

(2) The FWC may make the order only on application by any of the following:

(a) the new employer or a person who is likely to be the new employer;

(b) a transferring employee, or an employee who is likely to be a transferring employee;

(c) if the application relates to an enterprise agreement—an employee organisation that is, or is likely to be, covered by the agreement;

(d) if the application relates to a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (b).

Matters that the FWC must take into account

(3) In deciding whether to make the order, the FWC must take into account the following:

(a) the views of:

(i) the new employer or a person who is likely to be the new employer; and

(ii) the employees who would be affected by the order;

(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;

(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;

(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;

(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;

(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;

(g) the public interest.

Restriction on when order may come into operation

(4) The order must not come into operation in relation to a particular transferring employee before the later of the following:

(a) the time when the transferring employee becomes employed by the new employer;

(b) the day on which the order is made.

[8] I have reviewed the application documentation and the accompanying material. These documents outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application address the relevant legislative requirements which are asserted to provide for proper basis for the making of the orders sought. I am satisfied that by virtue of the operation of the FW Act, if the orders sought were not made, the Transferring Employees would continue to be covered by the Kmart Agreement.

[9] Having examined and considered the application, and the accompanying materials including the Statements in Support from the Transferring Employees, I have taken into account the provisions of paragraphs (a) to (g) of subsection 318(3) of the FW Act and am satisfied that it is appropriate to make the orders sought under s.318(1) and (b) of the FW Act.

[10] In accordance with section 318(4) of the FW Act, the order 1 shall have effect from the time when the Transferring Employee becomes employed by Kmart or the date of the order, whichever is the later.

COMMISSIONER

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